BMW recently revised its profit margin projections for the year as a consequence of sluggish demand in China and complications associated with a braking system provided by Continental. The carmaker disclosed that the braking system-related delivery delays would have a detrimental impact on sales in the latter half of the year, affecting more than 1.5 million vehicles in total, with over 1.2 million already delivered cars potentially subject to remote fault checks through software updates, while the remaining 320,000 units are currently undeliverable.
As a result of the braking system issues and the ensuing delivery obstructions, BMW anticipates incurring substantial warranty expenses in the third quarter, amounting to “a high three-digit-million amount”. The company now anticipates its earnings before interest and tax margin to range between 6% and 7% for the year 2024, a downgrade from the earlier estimated range of 8% to 10%. Additionally, Continental, the supplier responsible for the problematic braking systems, mentioned that only a limited portion of the affected components would need partial replacements due to potential electronic component impairments.
BMW also highlighted the persisting subdued demand in China, expressing that despite governmental stimulus efforts, consumer sentiment in the region remains feeble. This challenges the luxury car manufacturer along with other automakers operating in China, a crucial market that plays a significant role in the global automotive industry.